As fast food workers see pay increase, restaurants raise menu prices

One month has passed since fast-food workers in California began receiving $20 per hour. At the same time, fast food businesses have raised prices up to 10% across the state.

Customers in Alameda are feeling the sting of the minimum wage increase.

"Just about everything on the menu has gone up," said Taco Bell customer Garrett Alcobendez.

In California, the minimum wage for fast food workers went up to $20 an hour on April 1.

A spokesperson for a coalition of franchises said it’s not up to corporate brands to make pricing recommendations, it’s up to small business owners to figure out how to offset the cost of new minimum wage. 

Pamela Mejia, who works at a McDonald’s in San Jose, said she hasn’t seen the impact yet, because her hours were cut shortly after the wage increase.

"To me, it will have a big impact because as a minimum wage worker I was earning $18.20," she said in Spanish, as a translator with the California Fast Food Workers Union interpreted.


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It’s happening at a lot of fast-food joints, where managers are raising prices and reducing hours.

Sanjeet Kumar, the district manager of Carl’s Jr. in Alameda, said prices at his restaurants have gone up by 7-8%. 

"Before we were not scared to pay employees 45, 43, 42 hours [a week], but now we are really concerned with them getting to 35 hours at most, because overtime would cost us a lot," said Kumar, who manages eight locations.

"It’s very difficult for us to stay in business if the cost goes up and we don’t make money, no business works without making a profit," he said.

Kumar said the company is looking into technology like AI to save money and eliminate positions, like the Taco Bell on Webster Street, which has kiosks instead of cashiers to take orders.

Alcobendez said he’s seen his favorite menu items increase by around $3.

"It’s honestly the same price as eating something healthy, so you might as well just grab something healthy," he said.

The most recent Customer Price Index report says prices at quick-service restaurants have jumped nearly 28% from 2019 through last year.

Meanwhile, McDonald’s CEO blames the new minimum wage and inflation for declining profits in California.

However, Mejia’s restaurant in the South Bay is trying to make it work.

"Yesterday, [the manager] had us workers in a meeting, and he basically told us we’re going to get our hours back," said Mejia, who has two kids to take care of. "We should all be back to 40 hours soon so I’m very excited to see the difference."

"I feel sorry about the employees," said Kumar. "Paying $20 minimum wage is good for the employees, but it’s not good for business right now," said Kumar, who is trying to work with his employees.

Economists said it’s too soon to know how things are really going to shake out in the long term and whether businesses will make more cuts or price changes, but the impact is felt by workers, business owners, and customers, businesses.